Seventh Circuit Rejects Subway Class Action Settlement, Remands for Dismissal of Entire Action
The U.S. Court of Appeals for the Seventh Circuit has rejected class certification and a settlement agreement in a lawsuit alleging Subway sells “Footlong” sandwiches that are sometimes shorter than 12 inches. In re: Subway Footlong Sandwich Mktg. & Sales Practices Litig., No. 16-1652 (7th Cir., entered August 25, 2017). “In their haste to file suit,” the court noted, “the lawyers neglected to consider whether the claims had any merit. They did not.” Additional details about this case appear in Issues 468 and 487 of this Update.
The court found that the parties established in early discovery that the raw dough sticks the chain uses for baked bread portions were uniform in weight and that variations in final length were “wholly attributable to the natural variability in the baking process.” In addition, meat and cheese toppings are standardized, “so the length of the bread has no effect on the quantity of food each customer receives,” the court said.
The plaintiffs shifted from a damages theory to a class claim for injunctive relief. Subway agreed to implement controls to try to ensure uniform bread length, but the court pointed out that the settlement “explicitly acknowledged” that even with controls in place, some bread would still not bake to a full 12 inches. “In sum, before the settlement there was a small chance that Subway would sell a class member a sandwich that was slightly shorter than advertised, but that sandwich would provide no less food than any other,” the court said. “After the settlement—despite the new measuring tools, protocols and inspections—there’s still the same small chance that Subway will sell a class member a sandwich that is slightly shorter than advertised.” One objector appealed the trial court’s approval of the settlement and certification of the class, arguing that the settlement did not benefit the class in any real way and thus was worthless.
The appellate court agreed, saying, “A class settlement that results in fees for class counsel but yields no meaningful relief for the class is ‘no better than a racket’ … The settlement enriches only class counsel, and, to a lesser degree, the class representatives.” The court reversed and remanded for dismissal of the consolidated actions.
Following the Seventh Circuit’s rejection, the plaintiffs notified the lower court that they terminated the settlement agreement, stating, “The confidential information and documents were not made part of the public record, so the appellate court did not know their contents when the appellate court was reviewing the settlement. Plaintiffs believe the appellate court would have reached the opposite conclusion if the confidential information and documents had been in the public record. On remand, plaintiffs intend to have all of the confidential information and documents made part of the public record, and plaintiffs intend to pursue this litigation.” In re Subway Footlong Sandwich Mktg. and Sales Practices Litig., No. 13-2439 (E.D. Wis., filed August 29, 2017).
